The reason why this is both good and bad, is because you can do whatever you want. But you don’t have anyone who holds you accountable other than yourself.
It’s your fault when you don’t make sales, it’s your fault when you forget to pay your taxes on time, it’s all on you.
Sometimes, it’s difficult to be your own boss. You have to choose which compromises you have to make.
And the problem with that is: If there is no manager whose job it is that we continuously improve, we often forget to set time aside to upskill.
So today, we’re going to learn how to keep learning.
Find a skill to learn/improve
This can be a skill that you already have but maybe you want to become better at it. For example, if you’re a good UX Designer, maybe you want to focus on how to do better user research.
But this can also be a skill that you know nothing about, like marketing or sales. Find a skill that will complement your business and make time for it.
Let me show you how ⬇️
What skill is worth investing in?
As a fellow freelancer, one piece of advice I can give you is that people book you for a specific skill. For me, it’s UX Design. People hire me because they want a new website or app or want to improve an existing piece of software.
It’s important to stay up to date with the main skill you offer as a freelancer. But often, it’s not the people who are best at their skill but the ones who are the best communicator and sales person. So it’s very important to be good at that when you want to be a successful freelancer.
Find what it is that you want to learn and improve on.
Currently, I’m investing in my communication skills. The main reason for that was the Freelance Blueprint Podcast. When I edited the first episode I noticed how rarely I finish my sentences and um and er. And only when I listened to my voice without watching the video to it I realised how important it is to communicate better.
Set a budget aside
It’s always good to have some money to re-invest in your business aka yourself. At the beginning, while you’re still building your shit happens-fund, you might not have budget to upskill. But overtime, your budget will increase.
For reference: At the beginning of my freelance career, I’ve not invested in myself at all. But currently, i’m spending 2k+ on coaching. I’m a strong believer that what you invest in yourself will come back to you.
What if I don’t have a budget?
If you don’t have any money you can invest right now, you’re lucky. Today, there are so many free resources out there. You can google anything and there’ll be a video tutorial for it.
The advantage of courses is that you get a structure. Modules are built on one another and as Eli has said in the latest Freelance Blueprint episode: It’s the fastest way to get you from where you are now to where you want to be.
You can also follow people on social media who offer great advice. Check out my stories today to see who I consider share great insights on UX and freelancing.
How to pick a course?
Personally, I tend to choose courses that are hosted life. Because otherwise, I won’t make time to watch them in my own time. It’ll have to be a set time and date.
But find a course that works around you. If the time zone doesn’t work for you, find one to watch in your own time or where you can watch the recordings.
And ideally, you’d pick a course that also offers a community access. The other people on the course will be in similar situations as you. It’s a great way to expand your network and find support.
Why do I need to invest in a new skill?
The world is constantly changing. 5 years ago, we wouldn’t have imagined that ChatGPT will write social media posts. Or that Midjourney will come up with designs. Especially when you work in tech, it’s important to stay up to date.
TLDR
Pick a skill to invest in
Define your upskilling budget
😩 If you have no budget: find a podcast or Youtube Channel💰 If you have a budget: browse for a course for your desired skill set
😩 If you have no budget: Schedule time to upskill, otherwise you’ll never do it 💰 If you have a budget: Buy that course 💪
Maybe your client has issues with investors? Maybe they don’t pay their invoice on time? And after 2020 we probably all learned that there are things outside our control.
That doesn’t mean you won’t be a successful freelancer. It just means that we have to prepare for things.
Build a shit happens fund
I used to call it a “back up” pillow, but one of my friends calls it the “Shit happens” fund and I prefer that name. Whatever you want to call it, it’s basically a stack of savings that you can fall back on in case shit hits the fan.
If you already have one in place: Amazing!
If you still need to build a shit happens fund: follow the steps below ⬇️
Figure out how much you need to put aside
First of all, you need to figure out what you need right now. And this can be different for everyone. How much are you spending every month to cover your bare minimum? This includes
Your rent
Your electricity/water/heating bills
Wifi bills and anything to keep your business afloat
Food (this means groceries, eating out isn’t an essential)
Figure out how much you’re currently spending on your essentials each month. If worse comes to worst: Is there anything you can cut back on? Like your Netflix subscription?
Then multiply this by at least 3. But even better: 6.
This is how I’d calculate my worst case scenario
I’m a digital nomad. How much I need in a month varies. And my options for when shit hits the fan also vary massively.
Scenario 1
So for example, I’m currently in Chiang Mai. If for whatever reason I don’t have any money coming in, I can drive to my grandma’s place in Lampang where I could live rent free. But I’d have to cover my drive there, any food we consume, and wifi costs. Thailand is pretty cheap, so all of this will not total more than £200/month. So that means my shit happens fund should have at least £600 in it.
Scenario 2
In a few months I’ll be in Japan. Japan is an expensive place! I don’t know anyone there, so I’d have to continue paying the airbnb. Food is also more expensive than in Thailand. So per month, I’m likely going to have to pay around £1,800. That’d mean my shit happens fund should be at least £5,400 or even better £10,800 💸
So depending on your personal cirumstances, how much you need to survive will look different for everyone. Figure out what the minimum is you need and multiply it by at least 3 to cover your costs for 3 months.
It’s unlikely going to take you more than 3 months to find some sort of income. But if you want to stick to freelancing, I recommend you prepare for the worst case scenario and save up 6 months of your essential spending.
Why do I need a shit happens fund?
There will be things out of our control and I want to make sure that you make the decisions for your freelance career from a healthy perspective, not from panic mode.
You shouldn’t take on low paying gigs with horrible clients because you need the money. I’d rather you say no to gigs that don’t fit your life-balance and make space for a gig that suits you and pays you fairly.
If you’re in a situation where you try to make money fast, it’ll burn you out. Knowing that you have a pillow to fall on will allow you to make better business decisions.
How to build a shit happens fund
The best way to build a shit happens fund is to automate it. You just set it up once and then won’t have to think about it. If you’re based in the UK, I highly recommend Monzo, they do this quite well. You can create “pots” and automate weekly or monthly payments into one of the pots. You just set your savings goal, how much to transfer and how regularly and wait for your pot to fill up.
Here’s a little affiliate link which will give both of us £5 if you sign up with Monzo. Wohoo, free money! 🙌
Of course, you don’t have to use Monzo, they’re not the only ones who offer automated transfers into a pot. Find a bank that fits your needs. Maybe you already have a bank account that you’re happy with.
☝️ NOTE
Make sure the money is easily accessible at all times. You don’t want to have to wait 3+ months to be able to access your funds.
I highly recommend that you learn more about money as a freelancer. Scroll down to see how educating yourself on finances can help you ⏬
Financial Freedom for Freelancers
Want to learn more about freelance finances?
Making the most of your money doesn’t just mean to earn more. It’s also about making the best out of the money you already have.
Maybe you could save some money? Maybe you can pay yourself in a more tax-efficient way?
If you want to learn how to make the most of your money,join the waitlist of the next cohort of my programme Financial Freedom for Freelancers
Here’s what some of the previous cohort have said ⬇️
Money doesn’t have to be complicated
Learn everything I know about money as a freelancer in the next cohort.
You can either send invoices manually or automate them.
Let me show you how ⬇️
Manual vs automated invoices
When it comes to chose whether you do something manually or automate it, I usually suggest automating it: It’ll safe you time and you won’t have to think about it.
But: When it comes to invoices, I haven’t found a platform yet that works for me. Because each month, I invoice different rates. I don’t have retainer clients and there’s one client who never pays on time. They pay, but often weeks and sometimes even months late 🫠 So I send a new invoice with a late payment fee. And so far, I’ve not found an invoicing tool that automatically adds late payment fees. And it makes an automated system more exhausting and I’d still have to do things manually.
But if you mostly charge the same rate at the same time to the same clients: Definitely automate your invoices. If that is you, scroll down to the “Automate your invoices” section.
If you prefer sending invoices manually, keep reading.
How I send manual invoices
One reason why I started doing my invoices manually was because I wanted a clear visual identity across everything I send to my clients. Looking back at it, that was the wrong priority, once you’ve invoiced, you already convinced the client to work with you and invoices don’t have to be pretty.
If you want, you can work on creating an on brand invoice. But it’s not important to make them look nice, as long as the important information is displayed.
To give you a head start, here’s a default google sheets template that I’ve tweaked slightly so you can use it for your purposes. Feel free to change it to your preferred font and colours.
Send an email with the invoice attached to the client
If needed: send an email with a reminder 2 days before due dateBest case scenario: They pay the invoice before the due date and that’s it, you got cash in the bank for the work you delivered 🙌Bad case scenario: They pay late (follow steps 4+ onwards for that) Worst case scenario: They don’t pay ever. So far, I was lucky that this hasn’t happened. But there’s legal steps you can take in case this happens to you.
Send an “Action required” email once they’re past the due date
Depending on the relationship I have with the client, I might let them off with the late payment fee. If it’s been several times that they’ve missed the payment, I send them an updated invoice with an additional late payment fee.
In case you want to automate things, which I highly recommend, here’s a few platforms I’m currently looking into. They all offer free trials but I’ve still not figured out yet which one to use. ☝️ On that note: set yourself reminders for when the trials end so you don’t end up paying in case you don’t use it.
Heads up: Some of them have affiliate links, so if you choose to sign up with one of them, I might get a few cents 🤫
Bloom.io
I’ve signed up to trial this one and forgot to cancel before the free trial ended 🤦🏻♀️ but it was only about $150/year so it’s not a crazy investment. But remember to make sure you set up reminders to cancel your free trials! It’s a bit exhausting to set everything up but once it’s up and running it’s not too difficult to use.
Client Manager
This is a project from Kyle Prinsloo. Maybe you’ve come across him online, if not, he’s a good person to follow for freelance advice. You can also check out the podcast episode I’ve recorded with him. Client Manager is still in the Beta phase but I’m observing the tool and so far it looks very promising.
Full Scope Freelancer
Still trialling this one, but it also looks quite promising. One thing I quite like is the “Opportunity Value” chart on the dashboard to keep your eye on the goal. You normally get a 14-day free trial but with this link you’ll get a whole month to play around with it. Check it out for yourself.
Stripe & Paypal
If you’ve decided to use Stripe or Paypal in this blog, it’ll probably be easiest to use their invoicing systems to get you paid.
If you’re already using a platform that you recommend to use for invoices, please let me know what you use. I’m still looking for my ideal invoicing tool.
No matter if you decide to automate your invoices or do them manually, it’s about finding a way that works for you.
Sending invoices can be tricky if you have a sensitive relationship with your clients. Just like reading this blog’s subject line: You might have felt a bit unsettled (again, sorry 🙈) – but imagine your client receiving an invoice with a wrong amount or a service they didn’t book. So always communicate with your clients, send invoices on time and reminders if needed.
👩🏻💻 Free Guide
The exercise described in this blog article is one of the steps of my free guide for people who want to create a work life that works for them.
Money isn’t everything. The reason to go freelance is the freedom to choose where and when to work. But we also have to pay our bills, so let’s make sure you have a way to receive money.
Disclaimer: Some of these have referral links, but I wouldn’t recommend anything that I’ve not personally used myself.
PayPal
(international)
This is an easy way to send and receive money. Almost everyone has a PayPal account. But they charge quite a lot of fees! But they only deduct those once a transfer is made. If you want to make it easy for your customers to pay you, this can be a good option. But be aware that they’ll take quite a chunk.
Stripe
(international)
Stripe is similar to PayPal but much easier to use and it takes a smaller cut of each sale you make.
Wise
(international)
If you’re planning to trade with businesses in different currencies,this one is for you. I’ve only used Wise for my private finances, not for my business. But if it’s as good for business as it is for private purposes, it’s definitely worth looking into it.
Starling
(UK only)
I’ve used Starling since I started freelancing in 2019 and never had an issue with it. I’m quite happy with how their app is set up. You don’t have to go to a bank branch to open a business account. Actually, it took me only a few minutes to set up an account and I was able to use the card online instantly.
Here’s a referral link, you won’t get much out of it other than a day pass to a National Trust venue.
Monzo
(UK only)
When I launched my freelance UX business, I couldn’t open a Monzo business account. Maybe because I registered as a Ltd.
But I’ve managed to open a business account as a sole trader for the Freelance Blueprint brand to make sure mentees won’t have to pay VAT.
So far, I’ve not used it much for the business because most payments are through my UX account where I use my Starling account.
But if you’re interested in opening a bank account with Monzo, here’s a referral link that will give you £5 to get started (Wohoo! Free money 🙌)
Why you need a separate bank account
When you start to work for yourself, it’s good to separate your personal finances from your business finances. And the easiest way to do that is to have a separate bank account for your freelance business.
Find an account that works for you
Depending on where you are in the world or which companies you’re planning to get into business with (just within your country or international), there might be other accounts that work better for you.
Just because I gave a list of accounts that worked for me doesn’t mean that it’ll be the best for your circumstances. So find a payment method that you trust, that protects you in case there are any scams and where you have a fast customer service if you have any doubts about payments.
👩🏻💻 Free Guide
The exercise described in this blog article is one of the steps of my free guide for people who want to create a work life that works for them.
Do you know what business structure you’ll have? In the UK, there are 3 types
👩🏻💻 Sole trader
🏢 Limited company (PSC = Personal service company)
☂️ Umbrella
Depending on where you (or your limited company) are tax resident, you might have different options than the ones mentioned above. But if you’re based in the UK, these are your options.
If you’re a tax resident outside the UK, I’m sorry, I can’t know everything. So you’ll have to do a little more research. But today, we’ll find out which business structure is best for you.
Define your business structure
If you’re a tax resident in the UK
Have a look at the pros and cons of each business structure below 👇
If you’re a tax resident elsewhere
Your task today is to find out what options you have and choose one that works best for you to get started.
What is a business structure?
The business structure of your freelance business will define the legal stuff of your company. This includes things like liability, taxes, legal requirements etc.
If you’re a tax resident in the UK, I normally recommend people to open a Limited Company.
☝️ BUT only do this if you know that freelancing will be your main source of income AND if you’re earning more than £30k/year.
Disclaimer: Before you go and open your limited company, always talk to a financial adviser. Your circumstances might be different. I’m not a financial adviser, I can only give you recommendations based on the knowledge I accumulated as someone who has been freelancing for 5 years.
Also, laws are constantly changing. I highly recommend to get an accountant to make sure you’re finding what’s best for you.
UK Business structures
A little more information about each of the business structures:
👩🏻💻 Sole trader
This is a common choice for many freelancers, especially those who just start freelancing on the side. As a sole trader, you have full liability if something goes wrong. But it’s very easy to set yourself up as a sole-trader.
Pros: easy to set up
Cons: not the most tax-efficient, full liability (get insurance!)
☂️ Umbrella
An umbrella company is basically a “middle-man”. It’s a company that hires you while you’re freelancing elsewhere and works as an employer for you.
If your freelance contract is inside IR35* you will not have a choice but you’ll likely have to go with an umbrella company. It’s not the best option when it comes to taxes. But when you just get started as a freelancer, this might be a good choice for you if you want to save time on the admin and accounting side of things.
Pros: you’re basically an “employee” and don’t have to worry about paying the right amount of taxes – the umbrella company will sort it out for you. It’s a good choice when you want to freelance full time but still figure out if freelancing is for you.
Cons: can’t claim expenses, not tax-efficient
🏢 Limited company
It’s pretty easy to set up a limited company in the UK. I was quite shocked, because in Austria (where I’m from) you need at least €30,000 in the bank to be able to open a Ltd. But in the UK, all you need is around £13 to register on companies house and congrats: your a company director 🥳
Pros: can claim expenses, pay yourself a salary and draw dividends; most tax efficient
Cons: more admin, you need to have a registered accountant.
*IR35 is a legislation for the UK only. If you’re outside the UK and aren’t planning to work with UK clients, you can forget about it. If you’re in the UK, this can be a complex topic to wrap your head around. But for now, don’t spend too much time reading into it. You can worry about it once you’ll have your first inside IR35 contract.
Online course – Freelance Blueprint
How to manage your finances as a freelancer
When it comes to tax efficiency and finances, it takes way more than a 5 minute task to learn what you need to know as a freelancer.
If you’re unsure how a business structure affects your taxes, then this course is made for you.
Join the next cohort for the Freelance Blueprint – How to manage your finances as a freelancer course. This course is designed to teach you everything you need to know about finances without hour-long googling.
Hopefully, this information about business structures helped you decide which one is right for you. If you’re still unsure which one to pick, Freelancer, just send me an email and I will try my best to help.
👩🏻💻 Free Guide
The exercise described in this blog article is one of the steps of my free guide for people who want to create a work life that works for them.
One big thing most freelancers are struggling with is how to price themselves. And most of the time people tend to undersell themselves and don’t charge enough 🫠
But I also understand that, especially when you get started, your main focus will be to land a client. And often, your main selling point will be that you’re more affordable than others. At least if you don’t have much leverage on why they should hire you compared to another freelancer offering the same service.
And there’s nothing wrong with this approach, especially in today’s market. As long as you don’t forget to increase your prices over time.
Once you have more clients and experience under your belt, your leverage will no longer have to be that you’re the most affordable, but maybe you’re having a fast turnover, or really good quality or worked for brands that give you a lot of leverage.
But also, you don’t want to be the cheapest option. When you’re in a restaurant, nobody orders the cheapest wine, people order the 2nd cheapest – at least that’s what my friends and I do who have no idea about wine 😅
Your pricing will affect how people perceive you. So only use the “pick me because I’m affordable”-approach if you have no experience in the services you offer.
How much should I charge?
There’s so many things to consider when it comes to pricing yourself:
Your experience
The value your client will get
Your investment (how much does it cost you to be able to deliver the service?)
Supply vs demand
Your competition
Probably a bunch of other things I forgot to list.
And on top of that, there’s so many different ways on how you can charge your clients for your freelance services.
Project based
Retainer fees
Daily & hourly rates
Value based (this one is amazing if you get it right, but it’s tricky to explain to your client how you came up with the rate, so we’ll leave this one for another time)
In this blog article we’ll talk about how you can price yourself based on a daily & hourly rate. This is the easiest to understand for most clients.
And also, what is the minimum you need to charge to sustain yourself.
Remember: Don’t just charge for your time
You’re not just charging the client for the time you spent executing whatever service they hire you for. You also charge them for the time it took you to gain those skills. AND you have to cover your own costs: Your software, your laptop, your electricity bill, material costs. Those don’t pay for themselves.
For example: If you’re a UX Designer, you’ll have to cover your costs for Figma, your website hosting or any other running costs.
But you don’t have to do much maths to figure out how much to charge. I’ve created an easy-to-use calculator so you can define how much you need to charge. Of course, you can always charge more than that, but this will be the minimum to cover your costs.
How to use the calculator template
Create a copy of the google sheets document
Adjust the values in the yellow cells to match your minimum (or ideal) income.
Adjust the tax rate if it’s more than 20%, based on wherever you are a tax resident.
Note: Those prices are rough estimates. Make sure your buffer covers any costs you accrue for your services.
Have a look at what your competition is charging. See what the industry standard is. Just as an example: As a freelance UX Designer in the UK, it’s pretty normal to charge £350/day. That was the initial day rate I had with only 2 years experience as a UX Designer back in 2019.
So I always recommend people not to charge less than that. But of course, it’s for you to decide what the minimum is you want to earn.
And if you’re a junior and you want to get more experience, it’s okay to charge less to get a foot in the door. Just remember to increase your rates in the future 🤫
👩🏻💻 Free Guide
The exercise described in this blog article is one of the steps of my free guide for people who want to create a work life that works for them.
Going freelance will teach you a lot, not just certain skillsets that you accumulate when you jump into the cold water, but also valuable learnings about yourself - and finances.
In this article, I’m sharing with you what I learned about money in my last 3 years of freelancing. I know finances can be overwhelming, especially when you just get started, but it’s not that difficult. Let me break it down for you.
My background
I always had an interest in money, because let’s be honest, life is so much easier when you have it, than when you don’t. I’m now earning a very comfortable income for my age, but it wasn’t always like this. There was a time when I had 3 jobs, so I could afford my full time studies and rent in Vienna. One of those jobs was an unpaid internship at an advertising agency.
When I moved to London, my first job paid minimum wage. I earned about £1,100 a month after tax. My rent was £650 for a small room in a flat share. Commuting would eat up another £150, so I had £300 left for food and whatever else I wanted to do in life.
In hindsight, I’m glad that I went through years of living pay check to pay check. It taught me to appreciate the income I have now. And most of all, I appreciate the moments when I sit in a restaurant and can order what I want, not what my budget tells me to.
1. You need the right money mindset
Most people just skim-read, so let me give you the most important information first: The way you think and feel about money will massively impact how you act with your money.
Do you have a scarcity mindset? Do you think you have to work hard for money and once you have it, that you can’t spend it? Or do you splurge and spend it as soon as you have it?
When you think that money is difficult to get, you will actually struggle to receive it. It’s like a self-fulfilling prophecy. Money comes and goes. To get money, you have to spend it. It sounds odd, but once you understand this it will make your life easier. The question is: where to invest it in and how much?
This is not about bitcoins and shares
I’m not getting into shares and bitcoins in this article. I’m not a financial advisor and I’m a lazy investor, which means I invest in something and am planing to let it sit there for 10+ years. Historically, if you put your eggs in all kinds of baskets, and let it sit, there’s almost no chance for you to lose the money you invested.
2. Invest in yourself
One thing I do think everyone should invest in is themselves. Invest in therapy, invest in coaches, invest in education. If you asked me what the best thing was that I ever invested in, the answer might surprise you.
I went to film school for editing and filming but we had the opportunity to join a one-week long acting course. They encouraged us to take it, because if we wanted to be a director one day, it’ll be good to know how it feels to be in front of the camera, so we can give actors the right cues. Even though I was very uncomfortable by the thought of being filmed and having to act, this was enough motivation for me to give it a try.
That acting course I took over 10 years ago was the best thing I ever invested in. It helped with public speaking, giving less of a shit of how I might come across on camera (although I still struggle with that) and most importantly: understanding other people.
Invest in your education and personal growth
I wish I would’ve had a different attitude towards investing money in growth and education sooner. I would be further ahead in my career if I did. I now pay for a coach and they’re not cheap but if it helps to shift my mindset and self perspective to feel worthy of increasing my rates and working on my goals, then it’s worth the money in the long run.
3. Remember your privilege
If you’re reading this article, you’re probably quite privileged. You might have had parents that invested in your education and helped you pay for your first laptop or university.
I had the privilege that my parents saved money for me during my teenage years. It was actually some kind of life insurance but paid out in your early twenties. My dad said it was a fund just in case I was going to get married.
Thank God I didn’t (not to shame anyone who did, but it’s not something that would’ve made me happy). Instead, I was planning to use that money to study abroad. I asked my dad how he’d feel if I were to spend the money that he saved for over 20 years in just one year abroad. The tuition fee for that university was quite a big chunk of the savings and for once I didn’t want to have 2–3 part time jobs. I just wanted to concentrate on my studies, so the remaining money of the savings budget would be spent on rent and food. He just said “I’m so glad you decide to spend it on your education” and with that peace of mind, I moved to wonderful Stoke-on-Trent and started my life abroad.
Be grateful for the support you have and the head start
If I wouldn’t have gone to university and gotten that education, I wouldn’t be where I am now. But of course you don’t have to spend that much money on university. Looking back at it, I would’ve done one UX bootcamp, struggled a few months to get a junior role and would’ve likely also gotten to where I am today. But I didn’t even know back then what UX was and how to acquire the skills.
4. Know your value
Know how much to charge for your services. No matter if you’re employed or a freelancer. Find out how much other people earn/charge for the same services you provide. There’s plenty of platforms like glassdoor which shows you the average salary or day rates in your field.
I recently started a new freelance contract. They have sent me some documentation to review on the first day. I’m not sure if they were meant to share everything with me, but one of the documents contained a file which showed what the previous UX Designer charged. They earned almost twice of what I was charging. And they handed over their designs in power point. Not saying that they aren’t worth their money, they were very specialised and niched down. But if I had known before, I would’ve asked for a higher day rate.
Of course, it’s difficult to find the sweet spot, especially at the beginning. Figure out your rate and know your value.
5. Always negotiate
If you’re negotiating your salary and they have a set budget, try to negotiate for extra days of annual leave. Or you can get other benefits like have them pay for your transportation, ask if you get a budget for training. Maybe you can get equity. See what’s possible.
It’s not common, but some companies are very transparent and have income brackets. Those that don’t might not pay equally. You don’t want your male counterpart to earn more than you, just because he negotiated a higher salary when he joined and you didn’t.
This one is not just important for work. See if you can negotiate with accommodations like booking.com. Reach out to hotels directly and see if you can get a discount, because booking.com takes an extra share of what you pay the hotel. So you can pay less and they can get more than what they’d get through booking, win-win!
6. Be aware of the tax you have to pay
I usually transfer 20% of all the income I make through my company into an easy access account which pays interest. I know I won’t have to pay all of that because of expenses, which will reduce the amount of taxes I have to pay. But putting all of that aside gives me reassurance that I don’t have to worry about the tax man. And everything that’s left is a nice bonus. It’s a good feeling when you know you can definitely cover the tax bill.
They’ll increase the taxes in the UK soon, so from this year, I’ll increase that share to 25%. Stings a little, but that’s how it is when a country has to find ways to make up for the whole in the pocket after paying out a lot of furlough money. Overall, I’m not against paying taxes, I see it as a luxury. The more I earn, the more taxes I pay, but as long as that money gets to support people, I’m fine with that.
7. Have a backup you can fall on
Emergency fund, fuck off fund, call it however you want to call it. But make sure you have some savings in case things go downhill. I think we all learned since covid that things can change very unexpectedly and very quickly. So be prepared.
Look at how much money you’d need to live somewhat comfortably for three months. This should cover rent, groceries, insurances etc. Try to put that aside into an easy access account. Once you’ve accumulated that, you can invest the remaining money you have in longer term investments. But make sure you have that backup.
Some people recommend having 6 months of savings. I have 3 months in my bank account that accumulates interest and another 95 days access account with a fixed interest rate. So if I notice that my 3 months of instant access might not be enough, I can give notice so I can access my 95 day access in 3 months from then.
Luckily, I didn’t need it so far, but it’s very comforting to know that I can technically live 6+ months from just my savings and won’t have to worry.
Since freelancing, I managed to build quite a good back up fund. Money just came to me. Which is also why I keep telling everyone to go freelance.
8. Let your money work for you
Don’t just leave your money in a bank account. Make sure you put it somewhere where you earn interest. Especially now that interest rates have gone up - thanks recession, at least you’re good for something. Invest in fixed savings accounts if you’re very risk averse. If you can live with your money not being accessible instantly, put it into a longer term fixed savings account. Or better, put your money in a stocks and shares ISA. If you don’t invest in stocks (and now is probably a good time to invest, because the economy isn’t doing so well, but again, I’m not a financial advisor, so take that info with a grain of salt) you will end up having less spending power. Because your money will lose value thanks to inflation.
9. Yes, you can get free money!
I have the luxury problem of now being VAT registered, which means I now have to charge VAT on my invoices. That VAT technically has to go straight to HMRC, which means it’s not my money, i’m just collecting money from others for the government. BUT in my first VAT year I can use a flat rate to pay and I’ll get a 1% discount. Meaning that of the 20% VAT that I collect, I only give 19% to the government, so the 1% is something I can keep in my Limited company.
That’s what you call efficient tax planning. It’s all legal. At least that’s what my accountant told me.
Another way of free money is putting it somewhere where you get interest. Please do, otherwise your money will become less valuable over time. Again, inflation.
10. Keep track of your money
Make sure you know how much money you have and how much you will need to spend in the near future. Put it in a spreadsheet, yes I know, those are fun. Maybe try using notion instead of excel to make it more interesting. I keep track of my personal accounts (I got accounts with some challenger banks, a traditional bank and a credit card with cashback for each purchase as well as an Euro account) and my company accounts for my freelance work (Paypal, Starling, Aldermore).
The money I earn isn’t technically mine, it’s my company’s money. Working with a limited company means I can access that money. But additionally to the 25% tax I have to pay on the income of my company, I have to pay personal tax on the money I draw from it. So it’s tricky to know how much money I actually have access to. This is why I have a spreadsheet to keep track and review each month to see if I spent too much, how much I can put into savings or investments and if I can cover any upcoming payments.
11. Have financial goals
Especially as a freelancer, it’s important to have goals. This includes financial goals. Make sure you put money in a pension. You won’t believe the amount of other freelancers I meet who tell me they have no plan for the future. Please don’t be one of them.
If you think the government will make sure you get a good enough pension, they won’t. Unless maybe you’re in Norway. Pensions nowadays are calculated with the idea that you’ll have your own property that is paid off and won’t have to pay rent. We’re not in the generation our parents and grandparents were. So unless we inherit something (hello inheritance tax) this might not be the case for you. So make sure you know how much you’ll need and see if you will get that. There are plenty of pension calculators out there.
Chances are, you won’t get a good enough pension through state pension alone. If you’re employed, ask your employer to increase his contribution or if you can increase yours. It’s also very tax efficient. If you’re a freelancer, I personally find Penfold quite good. It’s specifically targeted at freelancers and therefore, unlike other private pensions, you can add as much or as little as I want. You don’t have to pay the same amount each month.
Of course, only invest money where you feel like it’s good to be stored, be aware of compound interest, so the earlier you invest, the better.
12. Balance your income
I’ve had quite a consistent stream of income since freelancing. Maybe I’m just one of the lucky ones. But even though money keeps coming in, the amount I get still fluctuates. For example, December is usually a bad month for me. Since I’m being paid on a day rate, I won’t be hired over the Christmas period, which means that I will only earn half as much compared to the rest of the year.
What I do is I calculate a certain amount as my ‘average income’. If I earn above that, I put that money aside, into fixed savings or investments. If I earn below it or have clients who tend to pay late, I can draw from those buckets in the meantime. This way I don’t have to worry if I can pay my upcoming expenses.
13. Money is power
You can use your money as leverage. Would you rather invest in an oil fund or in renewable energy? Do you want to buy from brands that exploit their workers or buy from an independent local store where the owner is doing a little dance after each purchase because you help them make their dream come true?
Once you understand how money works and how to make it work for you, it will keep growing.
14. Get expert advice
I’m not a financial advisor. But I’ve done my own reasearch. We’re lucky to live in the times of the internet where we can quickly google something. But also be careful who’s advice you take on. Anyone can put information online (just look at me writing this article).
But there’s another big thing financial experts won’t do: they won’t be as keen to grow your money as much as you are. They will give you recommendations based on where they earn the best commissions, not on what’s actually best for you. So do your own research, compare offers, negotiate and most importantly: get started on sorting out your finances.
Here’s my recommendations for you
Again, I’m not a financial adviser, this is all just from personal experience and research. But here are the basic things I think anyone should do:
• Invest in a pension • Build a fuck off fund or back up • Have all the money you don’t need accessible in the next 3–6 months into longer term investments • If you’re in the UK open a LISA and ISA (I have mine with moneybox) • Educate yourself on money. I cannot emphasise how much Money: A user’s guide by Laura Whatley has helped me. It doesn’t just explain money and how to make it work for you but also the relationship you have with money
One thing I never understood was why we weren’t taught about money at school. I wish little 10yo me would have known about long term investments and just put her pocket money into a stocks and shares account. But better late than never.
Money is just money. That’s easy to say when you have it, but if you don’t it’s difficult to get hold of it. But once you leave your scarcity mindset (see learning #1) it’ll be easier to get money coming in. It’s like a switch. Once you don’t occupy your mind with “I don’t have” but with “I will get” things will happen for you.
Useful links
One book I cannot recommend enough is Money: A user’s guide by Laura Whatley. It has taught me so much about money and how you can make it work for you.
In this episode of The Freelance Blueprint, host Elisabeth Mayr chats with Owain Lloyd-Williams, an SEO consultant with a fascinating journey from teaching English in China to becoming a sought-after SEO expert.
Owain opens up about his path into freelancing and shares his perspective on: ✅ The evolving landscape of SEO in the age of AI ✅ How to find your niche and stand out in the freelance market ✅ The nuances of working with global clients ✅ His thoughts on scaling a freelance business while staying authentic ✅ Challenges and rewards of building a long-term career in freelancing
Whether you’re an aspiring freelancer or an experienced consultant, this conversation is full of actionable tips and real-world insights to help you navigate the digital age.
🎧 Subscribe to The Freelance Blueprint for more conversations with freelancers worldwide, uncovering strategies, tools, and stories to help you grow your freelance career with confidence.
SEO freelancing tips, Owain Lloyd-Williams SEO consultant, how to become an SEO freelancer, AI and the future of SEO, scaling a freelance business, working with global clients freelance, finding your freelance niche SEO, freelance blueprint podcast SEO, SEO consultant journey, from teaching to freelancing story
In this episode of the Freelance Blueprint, Petra and Lisi talk about their journeys as freelance UX designers.
Together, they explore the ins and outs of finding and managing clients in the freelance world. They delve into effective strategies for client acquisition, the importance of building a strong portfolio, and the nuances of client communication.
Petra shares her journey from working through platforms like Toptal to establishing her own client base, emphasizing the power of referrals and personal connections.
Tune in to discover practical tips on pricing, project management, and maintaining a healthy work-life balance as a freelancer. Whether you’re just starting out or looking to refine your freelance business, this episode offers valuable insights to help you thrive.
With 9+ years experience as a UX Designer and 5 years as a freelancer, Lisi is trying to help as many freelancers as possible to create a work life that works for them.
🎯 What you’ll learn in this episode
1. Crucial mistakes to avoid when it comes to pricing
2. How to find clients on and off freelance platforms
3. Managing working remotely vs in an office
4. How to maintain a healthy self-worth and mental health
Freelance Podcast, Freelance Blueprint, Advice for freelancers, Finding and managing freelance clients, Balancing work and personal life as a freelancer, Pricing strategies and crucual mistakes, Importance of Mental Health and Self-worth
You’ve done it. You got the client. You delivered the work. 💪
But then… they don’t pay. Every freelancer’s nightmare. But then not paying isn’t even the worst part about this. It’s the questions you’ll ask yourself. “What did I do wrong?”, “Was what I delivered so bad?”, “Maybe they didn’t like me.”, “Maybe I was rude on a calls.”
But before you ask yourself any of those questions, ask yourself: “How am I going to get the money?”
Welcome back to the Freelance Blueprint. I’m your host Lisi, a freelance UX designer and digital nomad. And today I’m going to talk to you about something that hopefully will never ever happen to you, but in case it does, it will help you get your money just incase your clients don’t pay you.
In this episode, I’m going to talk about what you can do to make sure you don’t fall into that situation in the first place. Well, there’s not always the chance thatwe can fully avoid it, but there are some prevention methods that you can useto make it less likely that it will happen to you. And then I’m going to talk to you about what you can do incase it does happen to you without burning any bridges.
If you didn’t get paid, listen to this
So, first I want you to know if you’re in a situation right now, if you’re listening to this podcast because you have a client that doesn’t pay you, I’m really sorry that you’re in this because it absolutely sucks. It adds to your endless to-do list and it’s a very uncomfortable situation to be in, but it happens more often than not.
Many freelancers can feel a little bit ashamed when it happens. And I definitely felt this way the first time one of my clients didn’t pay on time, but it’s not your fault. And sometimes there’s tons of reasons for it that have nothing to do with you.So, first, it’s completely normal. It will happen eventually. Hopefully, it will happen less often and less likely, but it does happen. It even happens to very seasoned freelancers. Like, I’ve been a freelancer for pretty much 6 years now, and I still have like last month I had an invoice that wasn’t paid.
So sometimes that’s just the case of the industry. It can very likely happen with startups because maybe they don’t have someone in charge with just invoices. It can happen with big corporates because there’s just so many levels of hierarchy and approval for an invoice to get approved and get paid. So don’t blame yourself. You cannot completely avoid it. But here are the systems that you can put in place to prevent it where possible.
You need a contract with payment terms
The most important thing is to have a proper contract in place. Have something that you and they signed about all the payment terms and that should include what they should pay you. If you have, for example, like a a one-off fee for the whole project, if you charge per the day rate, hourly rate, it should define what it is that they pay you.
Those payment terms should also define how long it should take them to pay you after you send the invoice and also ideally when you invoice. So if you have like a several stage project, let’s say you work on an app and you get paid for the wireframes, you get paid for the UI design, you get paid for the prototype, etc.
Are you going to invoice them at the end of the month or are you going to invoice them as you’re working on it?Are you going to invoice them as you deliver the work, which can be a bit tricky because then they already have what they need without you having the payment. So it would be easy for them to just take your designs and leave.
So I would suggest that you don’t go for that option in the contract or maybe they pay you a deposit. So you start on the next phase and then they pay you the rest after delivery. So it should define when you invoice them, how often you invoice them and how much time they have to pay you once they receive the invoice. So very common it’s like 30 days or 14days, 2 weeks. But some companies ,they’re like we just operate on a monthly basis. So, if you invoice us inJanuary, you’re going to get paid inFebruary, not within 14 days, but within30 days.
So, some clients, even if you put a 7 or 14 day payment period in there, they might renegotiate that with you. And then it’s up to you how much you want to work with that client and if you’re okay with that, to have that payment in 30 days or sometimes even like 60 days, which I would not recommend.
Late Payment Fees
And another thing you should have in your contract to incentivise them to pay on time is to have a late payment fee, which basically means if they don’t pay within the let’s say 30days, they have to pay X amount extra.You don’t have to enforce it. Sometimes it happens that the client pays like oneday late or you send them a reminder and then they’re like, oh, and they instantly transfer it. I would say stick to your boundaries and that’s up for you to decide.
When I started freelancing, even if they paid me like 10 days late,I was too scared to send a late payment fee. I mean, at the beginning, I didn’t even have a late payment fee, but I was a little bit worried about sending them a new invoice with the late payment fee because I didn’t want to feel like greedy. I didn’t want to lose the client. But in reality, you have your part of the contract that you deliver the work and they have their part of the contract that you pay for it. So if you stick to the contract, they should as well. So now that I have a little bit more experience, I would enforce it, even if it’s like one or two days late because it’s just unprofessional from them that they don’t pay you on time.But again, it depends on the client.
Like there are some clients that I’ve worked with for several years or like they come back for me with new work or for different projects and I don’t want to burn that bridge. So sometimes I let it go even though maybe it’s even a month late, which isn’t ideal, but It hink I’d rather put the client first and I want to make sure that they’re happy to continue working with me.
But if it happens several months in a row, I would definitely enforce the late-payment fee. Another way you can avoid them paying you late is by charging the money up front. Maybe not all clients would be happy to pay you the full amount up front, but you can negotiate a deposit. Let’s say you’re a brand designer and you have a certain set of deliverables. Before you even start working, you’re going to charge them 50%. Because you’re going to do theresearch, you’re going to do some questionnaires.
So, even if they don’t see any designs, any type faces, any colors whatsoever, you got the deposit because you’ve done the work. If they drop out, if they ghost you, you at least have the deposit. If a client is hesitant to pay you a deposit, that could also weed out the bad clients because if they’re unwilling to pay you that, chances are they will negotiate and they will delay payments and things like that. If it’s a good client, they have no problem at all with paying you a deposit to start the work.
The other thing that you can do is to always have the payment terms also in your invoice, not just in your contract. So, every time I send an invoice, I have a little clause in there that says, “Payment due within x amount of days, x% late payment fee applies.” So I do have this little small print and that’s clear on the invoice. So even if someone’s getting that invoice who didn’t read the contract, if they have like a different accountant, etc.
It’s very clear wh ever gets the invoice that they know when they should pay and that there’s an incentive for them to pay on time. If you really want to and um I know that from furniture companies they do that.They sometimes give clients a discount if they pay in advance or if they pay cash instead of card, things like that.So, if you want to improve your cashflow, you could even incentivise the client that if they pay for the full project up front that they get a discount. It’s up to you if you’re willing to do that.
I don’t think it’s that common to do it because you’re basically reducing your rate for like some extra cash. But also, if it means you get money like 2, three months upfront and then you can do something else with that, reinvest it in your business or do other things, why not give them 1%or something off for earlier payment.Also, don’t underestimate emails, especially friendly reminder emails, because people understand that there’s a little bit of a unfriendliness to it that you have to remind someone, but it’s like the friendly reminder.
So, what can be useful is to send a reminder email 2 3 days before the invoice is due. Something along the lines of thisis a friendly reminder that invoice X,Y, and Z is due by X date. If you already scheduled the payment, there’s nothing for you to do. If you haven’t, please keep in mind that there’s going to be an X amount late payment fee. It’s up to you how much you want to charge for the late payment fee. Mine is quite low. It’s 2%. I’ve seen other people charge 7% for a late payment fee.
Or it might even depend on the amount of invoice that you have because if it’s like a 100 pounds invoice like I hope you don’t send 100 pound invoices because like you should be charging more or you should acrue more work before you send that invoice because every single time you do those things manually it takes something out of your time that you could be using for something else.But let’s say your invoice is £100having like 2 3% is not really a lot. So maybe then you can charge like a 10% late-payment fee. However, if your invoice is £10,000, 2% 3% is actually a semidecent amount.
Emails are powerful, if done well
Send those reminder emails. And I know it can be super daunting and uncomfortable to press send on an email like that, especially if it’s the first invoice that you’re sending to the new client. So, one way you can do that, making you feel a little bit less uncomfortable, is by automating those emails. But, of course, you need a system that knows if you have been paid already because you don’t want to send this email if you already received the money. Or you can do it manually and just make it look like it’s automated. Like for example, change the font a little bit to what your default font is in emails or add automated message in the subject line.
Seems a little bit sneaky to fake an automated email. But when you’re the receiver of that, you take it a little bit less personal if you think like, okay, it’s a bot that’s chasing your invoice or ifit’s the freelancer personally chasing your invoice. Or maybe you have an assistant.
Ask your assistant to chase that invoice if you have a VA or maybe like I heard from people that have a separate email and they usually use a male assistant because well I’m not going to get too much into that topic but it seems that people respect men more than women and if they get an email by John asking you to pay the email compared to Sarah chances are they actually going to pay John’s invoice before they pay Sarah’s.
So, if you create like a fake email address fora fake assistant, consider making that fake assistant mail. Or if you’re really sneaky, if you don’t have a VA, if you don’t want to fake automated emails, you can create a new email account. Just make sure that it’s like if your email address is like mine, it’s hello.co.uk. It could be like admin@elisabeth.co.uk or like whatever, john@elisabeth.co.uk
And then John would send that invoice chasing it. And it comes across very professional and it kind of takes the burden away from you. So that might be another sneaky way how you can do it.
Consider a Middle Man
Another option is to get a middleman. And I’m not usually a fan of getting a middleman. I would not recommend that if you’re in the industry much longer, butyou can get a middleman doing the invoicing for you with platforms like for example Juno. If you haven’t heard of YunoJuno, it’s basically a platform where people can look for freelancers and where freelancers can find gigs.It’s like a better version of Upwork and Fiverr because they actually pay decentrates and their USP compared to other platforms is they pay you no matter ifthe client has paid the invoice or not.
So, the freelancer is going to get paid within their payment terms and YunoJuno is going to chase the client in case they didn’t pay. But then again, working with platforms like Uno Juno means that they take a batch of the share. I do think they charge the client, not the freelancer, but just keep that in mindif you want to have this extra safety of having a middleman involved.
How to Handle when they’re past the payment due date
Even though you might do all of the things that Ijust explained to you and have all of the precautions of making sure that theypay you on time, you might still get into the situation where they don’t pay you. So, here’s how you handle it whenit does happen. Send them another friendly reminder email because sometimes it’s just a bit of oversight.They forget it.
They have so many things to do at the end of the month and they might have forgotten to clear your invoice. So send a friendly reminder email within one or two days after the due date. If they still haven’t replied to that email and if you still haven’t gotten paid after, let’s say 5 7 days after the invoice was due, send another reminder email. And this one can be a little bit more strict.
So you can think of it like the first email being like the good cop and now you’re saying the bad cop email. Good cop email is something along the lines of like this is a friendly reminder that invoice XY Z set was due on X date please pay. Bad cop reminder can be something like oh invoice was due X days ago. If you don’t pay by the end of the day I’m going to send you an updated invoice with the late payment fee of blah blah blah applied.
Always attach in both of them the original invoice so that they have it handy. They don’t have to waste time to find the invoice to pay you so that they can action straight away. Or if you have things like Stripe and you can send them a payment link that where they can do everything online instantly, even better. Of course, Stripe takes fees.So, it’s up for you to decide if you want the client to do a transfer or if you want to make it easier for them through a payment link.
Okay. If you sent the good cop, you sent the bad cop, and they still didn’t reply, they still ghost you, you still haven’t heard any update on why they haven’t paid you orif they’re going to pay you, then you have to take more measures. This iswhere things get a little bit uncomfortable. You can get out of emails, send them a WhatsApp message, slack them. I once had a client who didn’t pay for like 3 months and I kept chasing them. I sent them emails like weekly and they ignored me. I slacked them and eventually I was like, I’m still on this project. I mean, this is awhile ago now. I wouldn’t do that anymore.
I would have stopped working for them if they didn’t pay the invoice for for this long. And it was a client that I’ve worked with for several years.It was a returning client and they have very interesting projects. They pay my rates. I don’t have to give them a discount. So I was a bit like I don’t want to have to chase her but at the same time mate you’re taking the piss just pay me. So normally I would have stopped work but because I didn’t want to burn that bridge I still worked forthem because also I knew they had tight deadlines and all. So I then messagedthe project manager I messaged the head of project.
I messaged the other developers because they all worked in the same office if they can reach out to that person who’s in charge of paying my invoice. And it’s not good for their reputation. It’s not nice that they know that the freelancers haven’t been paidfor several months. So, if you can avoid that, avoid that. Luckily, everyone inthe team was very understanding.
They were saying like, “Oh, yeah, I messaged him, but I haven’t heard.” Maybe they haven’t. Who knows? But, um, it’s a very uncomfortable situation, but at the same time, it’s your money. You should you should get paid for what you delivered. It’s really uncomfortable. It’s not a nice thing to do, but if you’ve been chasing an invoice for 3 4 months, they’re taking the piss. So, stop people pleasing. You should get paid for your work. So, you should be able to get your money. Okay, you’ve done all of that. You even contacted other people in the team that are not involved with paying your invoices, but you want to add some pressure to it so you finally get paid and still nothing happens.
Cease Work if neccessary
I feel your frustration. I’ve been there. Then stop your work for them because it’s likely that your other invoices are also not going to be cleared. Stop working for them. Make it clear for them that I have sent X reminders. I have contacted people ABC and still haven’t gotten any information about if you’re going to pay my invoice and at the moment this is due including the late payment fee of month 1 2 and three. Now it’s um x y and zed. You send the updated invoice with the updated late payment fees.
So like every single time you do that, it’s extra admin from you because you have to review that invoice if it’s the right amount, etc. So like you do extra work that you wouldn’t have to do if they would have just paid you on time. So tell them, I’m going to cease all the work. I’m not going to continue. I’m not going to handover any other deliverables even if they’re done. Unless you pay those invoices. In my opinion, the whole point of freelancing is that you don’t have a boss. Like you have a business.
Yes, maybe you’re kind of the only person working in the business. And if you don’t have all the systems in place that it doesn’t run without you, it’s not 100% a business because a business should run on its own. But you’re not an employee. You created this freelance career so you can have the life that you want, that you have the freedom you want, and for that you need to get paid.
And you have contracts with your customers. So, if you hold up to your part of the contract, you deliver the work, you send files over, you join meetings, whatever it is that’s in the contract, but they don’t keep up to their part, which is basically just sending you the money and the information you need to do your work,then then why continue working for them?
Like, you had an agreement. That’s what a contract is for, that everyone knows what they have to do, and one of their jobs is to pay you. Okay, you stopped working for them and you still haven’t heard from them. Now, it’s time to take legal action. It depends again how much money they actually owe you and that will define what your options are. And it’s so nice to take legal action.
It’s super scary. It’s very uncomfortable, but like not getting paid for your work is so uncomfortable. And do you want to carry with you the anger about them not paying you? And then maybe you’re being worried about future clients not paying you, etc. Do you want to carry that with you or would you be okay to just stand up for yourself and go to court?
If nothing works: Take Legal Action
If you’re in the UK, there is something called small claims court and it’s for anything below I think it’s £10,000 and if the invoice that you’re sending them isbelow £10,000, you can basically do it online. You don’t have to call anyone.You don’t have to go to an institution.
You don’t have to go to some council office or whatever. You can do everything online. And it depends on the invoice, how high or low the invoice is, how much the fee is. I only once had to do this, thank God, and it was like a £500 invoice, but they were just not willing to pay me. And it was because I mean it was like a little bit out of a norm situation, but I was working at the startup. They paid me at the beginning £20 a day, which was absolutely nothing. And then they wanted me to work full-time and they paid me £200 a day, which wasn’t too bad for me at the time, but at the same time, I thought I was employed, butI wasn’t. I was a freelancer.
They asked me to send them invoices. I was in my early 20s. I had no idea what I was doing. I didn’t know that I was a sole trader. At that time, I did end up doing my self-return assessment. So, I did everything legally in the end. But as I was working for them, I had no idea that I wasn’t actually an employee, thatI was not going to get pension contribution, that I didn’t have insurance and all these kind of things.So be careful when you get into those kind of work relationships.
So it was kind of the worst of freelancing because you don’t get the rate and you don’t get the freedom. And it was the worst ofbeing employed because I didn’t get a pension, I didn’t get paid leave, etc. And I’ve been working with them for about a year and I was arguing with them that look, you basically treat me like an employee. I want to get paid. I want to get paid time off. like you barely pay me anything anyway. I had it in writing.
I had an email where they said they’re going to pay me the £500 for a two week holiday or something. And consider I worked there for a whole year not taking any time off, not even calling in sick. Yeah. So after that I left the company and that was before they paid me the £500 holiday money. And then they said, “No, we’re not going to pay you that. You’re not working for us.
So why should we pay for this?” And it’s like because you agreed to it. So then that’s when I had to do the small claims court. Back then the fee was like £35and I was so worried to do that because like oh my god I’m basically suing them what’s going to happen but at the same time I was stubborn like I don’t know if today I would chase £500 might depend but with that client I was chasing it because I was like I wasted I mean yes I learned something there but I wasted a whole year working for you for £200 a day as a freelancer not being able to save any money not being able to like accrue money into my pension things like that. So I was just stubborn.
I just wanted to win. So I went online, researched what I could do, came across the small claims court, submitted the form and paid the £35 fee, whatever it was back then. And I waited and I shed my pants and then suddenly they sent me the money. And basically what happens is they will get a legal letter saying that this is the case.This is what’s happening. You have time to either defend yourself or to pay this amount.
And I think they just didn’t want to make a court case out of it. andI had it in writing that they were going to pay me. So, it was really hard for them to get out of this. So, yeah, that’s then they paid me. It wasn’t a fun experience. It was not nice and luckily it didn’t actually turn into a whole court case, etc. But that’s an option that you have. So, if you’re in the UK, it’s called a small claim court.
And depending on which country you’re from, where you’re based, if you have a limited company, if you work as a sole trader, things like that, you might have different options for that. So keep thatin mind if you have to enforce them paying you. That situation definitely burned that bridge.
But also, I was ready to move on. I didn’t want to work with them anymore. It was actually already after I quit working with them.So only do that if you don’t want to work with the client anymore. If you don’t have anyone in a senior suite that you want to stay connected with, be mindful when you take that step. I really hope for you that you do not have to go through that, but just know tha tif you’re in a situation where they don’t pay you and it’s less than £10,000 or depending on where you’re based, it will probably be a different amount.
Can You Spot in Advance a Client that doesn’t pay?
But know that there is that option. Can you spot in advance if a client is unlikely to pay you? Not really. But there might be some red flags. One of them I mentioned before it’s for example if you ask them to pay a deposit and they don’t want to pay a deposit. Another one could be if they negotiate your rate too much.
You give them your industry standard rate and they still want to say oh it’s too much for us. It’s this is that doesn’t mean that they won’t pay you.might just mean that they don’t have more budget but it could mean that they will struggle to pay you because this is what happened with the other client that I mentioned before who didn’t pay me for 3-4 months because they had some cashflow issues and they thought well we need to pay our staff like it’s a legal thing we have to do but we can avoid paying our freelancers and just wait until all the money comes in which is nice but that’s the risk that you have when you’re a freelancer.
Another red flag could be that you have to chase them for things. So before you start working together, you might have to chase them to send you brand guidelines to um sign the invoice. Whatever it is, if you constantly have to chase them, it means they don’t have the systems in place to do things on time or they don’t stick to their tasks. So chances are they will likely pay you late.
Also, if it’s a small client, if it’s like a startup and they’re also a one person business, you never know what someone’s going through. So maybe someone just passed away, maybe they have some cashflow issues. So always be mindful, always be nice if someone doesn’t pay you. If it’s a big corporate, then I mean there’s still person, there’s still a human behind paying you, but they do have the systems in place. They have those reminders.
They have like software for that. So always think about who you’re actually working with and why they might not pay you. All right. Usually at the end of the podcast, I ask my guests about the things that their future past self would tell them. But now I don’t have a guest.
What You Need to Hear
So I was thinking, how can I wrap these episodes up? So I’m just going to tell you what I wish someone would have told my youngerself when I wasn’t in my first situation where my client didn’t pay me on time.And I really, really hope that you’re not going to find yourself in that situation.
But if you do, and chances are you listening to this podcast episode might mean that you are in the situation right now, hearing these things might help you. You’re not the first freelancer this happened to.
Unfortunately, it’s quite common. You are basically giving away a free loan to your client without interest. So, don’t let them get away with it. You didn’t start your freelance career to continue being a people pleaser. So, stand up for yourself. You’ve done your part of the contract. They have to do theirs.Chasing your invoice might feel rude, but it’s just industry standard. It’s common. It’s normal. Send that friendly reminder. And there are platforms and resources for this. Go get legal advice.
If they haven’t paid you for over 3 months, definitely go and talk to someone about this. What’s the worst thing that can happen? That they’re not going to pay you. Well, that’s already happening right now. So, it can only go uphill from there.
Outro
Thank you so much for listening. I hope this episode was useful. If you ever had to deal with clients not paying your invoice or if you’re in that situation right now, drop a comment below. I would love to hear more about this and see if I can help you. Or if you don’t want it to be public on this video, you can send me a DM on Instagram. My handle is @elisabethmayr. But again, maybe some other freelancers will see your comment and they can help out as well.
So feel free to comment below. If you need some templates on what to actually write when you’re in a situation of unpaid invoices, check the description. I’ll add links to some free templates for you so you know “exactly what you say when your clients don’t pay”. And yes, ChatGPT came up with that sentence, but I was like, actually, not that. Let’s use that. Thanks so much for listening.
Don’t forget to like this episode, share it with anyone that you think can benefit from listening, and also subscribe. It’s all from me, and I can’t wait to have you join again next week.Bye.
🙏 Don’t forget to hit subscribe so you don’t miss the next episode of the Freelance Blueprint.
